Retail Sales Rise, but Stores Relied on Discounts

Monday

The reports suggest that jittery consumers are flocking to rock-bottom prices and to little else — a boon for discount stores but trouble for higher-end chains.

Black Friday was big — but with a big caveat.

With stores dangling steep discounts and consumers worried about the economy, retail sales surged on the day after Thanksgiving, yet the amount of money each shopper spent fell, according to two reports released yesterday.

The reports suggest that jittery consumers are flocking to rock-bottom prices and to little else — a boon for discount stores like Wal-Mart and Best Buy and trouble for higher-end chains, like Nordstrom and Abercrombie & Fitch, which are averse to discounting.

Sales rose 8.3 percent on Friday compared with last year, the biggest increase in three years, according to ShopperTrak, a research company. On Friday and Saturday combined, sales rose 7.2 percent.

But shoppers did not splurge, spending an estimated $348 each over the holiday weekend, down from $360 last year, a survey conducted for the National Retail Federation found.

“American consumers are trying to outsmart the stores and wait for desperation discounts,” said Burt Flickinger, a retail consultant.

Retailers’ performance over the Thanksgiving weekend is closely watched because it accounts for up to 8 percent, or roughly $40 billion, of all holiday sales, which are expected to reach $475 billion this year, according to the National Retail Federation, the industry trade group.

Over all, retail sales growth this season is predicted to be the weakest since 2002, with spending pinched by rising energy costs, falling home prices and a tight credit market.

As expected, cost-conscious consumers favored discount chains over costlier stores this weekend, according to the survey, conducted by BIGresearch.

Of those surveyed, 55 percent said they had shopped at bargain chains like Wal-Mart and Target, up from 50 percent last year. The percentage who made a purchase at traditional department stores, like Macy’s, fell slightly.

That shift appeared to confirm suspicions that shoppers would “trade down” this season, largely bypassing full-price stores to save money. That is a reversal from previous years when shoppers eagerly traded up to luxury outlets like Ralph Lauren.

Deanna Babikian, 42, had no plans to trade up on Friday, arriving at Target in Framingham, Mass., by 6:30 a.m. to buy a 42-inch television for $798. “You have to go then. You can’t get these kinds of deals any other time,” she said.

Higher gas prices, and a reluctance to drive to stores, may be behind the big rise in the percentage of people who shopped online, 32 percent, up from 23 percent in 2006, the survey found.

Bill Martin, the co-founder of ShopperTrak, said the stronger-than-expected sales on Friday should leave stores “breathing a sigh of relief.”

But why did individual spending fall, if sales rose? One explanation is that the most heavily promoted — and discounted — products this holiday season cost less than those of last year.

In electronics, for example, two best sellers on Friday were Kodak digital photo frames (for about $100 to $250) and a KitchenAid mixer (for $130), rather than flat-screen televisions, last year’s must-have gift.

“It takes a lot of $130 stand mixers to add up to a $1,000 high definition TV,” said Ellen Davis, a spokeswoman for the National Retail Federation.

The retail federation’s survey found that earlier store hours lured more shoppers. About 2.6 percent of those surveyed shopped at stores with midnight openings on Black Friday, up from 1.3 percent a year ago.

The discounting in brick-and-mortar stores will spill over onto the Web starting today.

In a departure from tradition, dozens of Web retailers will offer free shipping, no matter how small the order, for Cyber Monday, as the Monday after Black Friday is now called (at least by nickname-adoring marketing executives.)

An estimated 25 percent of online retailers will offer the promotion, like Joann.com, the Web site of Jo-Ann Fabrics and Crafts; HSN.com, the home shopping network Web site; and Giftcertificates.com, a site that sells gift cards from hundreds of stores.

Most retailers provide free shipping only for orders of $50 or higher. But merchants have observed that, although consumers historically flocked to retail Web sites today after spending the weekend browsing at stores, they were still reluctant to buy.

“It’s people coming into browse,” said William Lynch, general manager of HSN.com, who added that the purchases on Cyber Monday in 2006 “were not as high as we wanted.”

With free shipping, he said, “we want to convert browsers into buyers.”

ComScore, a research company, predicted that online sales might surpass $700 million today, a record for a single day.

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